Beauty school pays Uncle Sam $11 million on claims of fraud on financial aid funds

The Marinello Schools of Beauty, a for-profit beauty school chain will pay the government and six whistleblowers $11 million over claims the school defrauded the feds out of federal financial aid funds. The case was brought forward byformer financial aid officers, instructors, career services managers and campus director — accused the company officials of using a variety of tactics to maximize the amount of financial aid funding the school received from the government. They said the school officials falsified the high school diplomas of at least 23 students so they could enroll them. The whistleblowers also said the school manipulated attendance records so that it appeared students who were no longer attending the Marinello were still there so the school could continue to receive federal financial aid funds for the students. In addition, the former employees accused the school of pushing students to falsify their income information on their applications for federal financial aid so that the students could receive more funding.

The government cut off financial aid funding to 23 of the Marinello’s campuses over claims that echoed some of those of the whistleblowers, including that the school falsified high school diplomas. The Department of Education also accused the school of not providing students with the necessary equipment to train, despite charging them between $2,500 and $2,750 for books and supplies.

The schools collected more than $51 million in federal financial funds during the 2014 to 2015 academic year alone.